DANGCEM Declares N158.28bn PAT in Q3 2018 Results,(SP:N210.00k)

Proshare

Monday, October 22, 2018    11.16AM  / NSE with additional from Cordros Capital


Proshare Nigeria Pvt. Ltd.


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 Cordros Capital – Initial Reaction

 

DANGCEM 9M-2018 results with Group Q3-18 EBITDA growing by a marginal 0.7% y/y while net profit was lower by 8% y/y. Revenue grew by 6% y/y on 10% increase in sales volume.

 

  • For the three months ended September, gross margin was 130bps lower y/y (dragged by non-Nigerian operation), opex margin higher by 256bps y/y (due to Nigerian operation), while net finance cost increased by 10% y/y (coming also from non-Nigeria).
  • For 9M-18, revenue and PAT grew by c.14% and c.3% vs. 9M-17. Annualized, both are tracking behind consensus’ 2018FY estimates by 2% and 13% respectively.

Breaking down Q3-18 result across the Group’s operations:

  • Nigerian operation recorded revenue (2% y/y), EBITDA (0.4%), and PAT (24% y/y) growth. Earnings was supported significantly by the growth in net finance income (302% y/y). The positives from Nigeria are (1) volume growth (6% y/y), higher gross margin (389bps y/y), and lower finance cost (-21% y/y), while the negative is the significant increase in both operating expenses and the margin (47% and 711bps y/y respectively).
  • Non-Nigerian revenue (14% y/y) and EBITDA (c.3% y/y) grew while loss after tax increased (230% y/y). Earnings was negatively impacted by the significant increase in net finance cost (302% y/y). Also impacting the result is the decline in gross margin (751bps y/y).

 

Comment:

The current y/y decline in quarterly earnings marks the Group’s third in a row. We think this might impact trading in the stock today, more so with annualized profit trailing consensus' at double-digit. Our estimates are under review.

 Proshare Nigeria Pvt. Ltd.

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